Simple, commonsense governance principles: some, apparently, too simple to apply.

• Author: Horton, Tom
• Position: Endnote - Corporate governance

THE COLLAPSES of Enron, WorldCom, et al. and a close inspection of their non-working boards have many of us scrambling to find easy answers, but of course there are none. The malady is not limited to telecommunication companies, dot-coms, start-ups or, apparently, any other category of business. Accountants are scrambling to defend their standards, and GAAP (Generally Accepted Accounting Principles) have in many cases metamorphosed into BAAP (Barely Acceptable...etc.).

Inspired by these depressing scandals, I've put together a few governance principles of my own:

* If it ain't broke, at least inspect it.

* If it looks too good to be true, it isn't true.

* Audit committees can succeed only with uncommon courage and ample time.

* There is no substitute for positive cash flow.

* Between reported revenue and reality may lie a GAAR

* Pride goeth before an accounting scandal and a haughty spirit before bankruptcy.

* Expenses are for sure; revenues are for maybe.

* If it is too complicated to understand, it is too complicated to govern.

It was Pope Julius III (1487-1555) who once said to a young monk commiserating with him about his vast responsibilities: "You will be astonished, my son, with how little wisdom the world is governed." Apparently not a whole lot has changed. Yet like other parts of business, and of the world, it is the process and the...